No Big Deal: The GM and Chysler Cases in Context

Abstract

Almost every leading corporate bankruptcy academic has spoken against the automotive bankruptcy cases. And the Chrysler and GM chapter 11 cases have been vilified in every major finance-focused media outlet - by everyone from Ralph Nader to Richard Epstein. In this short paper, originally written for the TARP Congressional Oversight Panel, I address the key academic arguments against the automotive chapter 11 cases and contextualize what happened in these two cases. Stripped of their speculation and 'what ifs,' I show that these arguments are no more persuasive than the loose, unsupported arguments thrown about in the popular press. But first, I show how these cases, and particularly their structure - a quick lender-controlled §363 sale - are entirely within the mainstream of chapter 11 practice for the last decade.

Lubben, Stephen J., No Big Deal: The GM and Chysler Cases in Context. American Bankruptcy Law Journal, Vol. 83, 2009; Seton Hall Public Law Research Paper No. 1467862. Available at SSRN: https://ssrn.com/abstract=1467862